Kenya Power should reduce its dollar loans
Nairobi, March 22 -- Kenya Power's decision to renegotiate the terms of a part of its US dollar loans will help alleviate its cash flow pressure in the short term.
The company should, however, treat this as the first step to reducing its foreign currency borrowings in general.
This is particularly urgent in the current context where the Kenyan shilling is losing ground against major world currencies, inflating debt service costs for companies with foreign debt.
In the case of Kenya Power, higher finance costs hurt the company as well as consumers of electricity whose bills are adjusted to take into account the effect of the negative currency movements.
Forex costs are currently the largest components in electricity bills among the var...
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